Pansasonic experiences sales and profit growth, maintains full-year forecast

Panasonic Reports Increase in Sales and Profits

© Reuters. In the latest earnings call for the third quarter of fiscal year 2024, Panasonic (OTC:) reported an overall increase in sales and profits, with automotive sales and currency translation contributing significantly to the growth. The adjusted operating profit saw a rise, mainly driven by the lifestyle, automotive, and energy sectors. Net profit also increased, bolstered by better finance income and expenses, alongside significantly improved operating cash flows due to reduced inventories. Despite the positive performance, the company faces uncertainties for the next fiscal year, including the impact of the U.S. Inflation Reduction Act and potential changes in the political landscape.

Key Takeaways

  • Sales and profits increased, with automotive sales and currency translation being key growth drivers.
  • Adjusted operating profit rose, led by lifestyle, automotive, and energy sectors.
  • Net profit climbed due to improved finance income and expenses, and operating cash flows increased significantly.
  • Full-year forecast for the group remains unchanged, despite revisions in segment sales and profit forecasts.
  • The partnership with Apollo for Panasonic Automotive Systems and the sale of Panasonic Automotive Systems are not included in the forecast.
  • The U.S. Inflation Reduction Act‘s impact on financial results and forecasts was discussed.
  • The company plans to use proceeds from the sale of certain businesses for growth areas.
  • Uncertainties for next year’s forecast include the U.S. Inflation Reduction Act and the possibility of Trump’s presidency.

Strong Performance in Electric Construction Materials

The company reported strong business in electric construction materials in Japan and overseas markets like Turkey and Vietnam. Successful actions like price revisions and hikes have contributed to this strong performance.

Potential Expansion in Automotive Battery Business

The Automotive Battery business may see a new plant, with discussions ongoing with multiple customers. This potential expansion aims to meet the growing customer needs in the market.

Flexible Target for Energy Sector

The target of 200 gigawatts by FY 2031 for the energy sector is flexible and dependent on customer demand and the electric vehicle market. This flexibility allows the company to adapt to changing market conditions.

Potential Provision for Quality Issues

A potential provision for energy sector quality issues in Q4 could amount to billions of yen. Panasonic is committed to addressing these issues and ensuring high-quality products for its customers.

Supply Chain Disruptions and CapEx Reduction

Plans to reduce CapEx by JPY 40 billion due to supply chain disruptions are in place. However, there is no change in the Kansas factory construction plan. The company is monitoring anode supply concerns and has partnerships for alternative materials to mitigate these disruptions.

Company Outlook

The full-year forecast for the group remains steady, with no major changes expected. The next fiscal year’s topline is projected to remain flat or slightly increase, with potential growth driven by generative AI-related business and the Kansas factory startup.

Bullish and Bearish Highlights

  • Bullish highlights include strong business in electric construction materials, potential expansion in the automotive battery business, and the aim to increase market share in France, the UK, and Germany for air to water products.
  • Bearish highlights include uncertainties regarding the impact of the U.S. Inflation Reduction Act and the possibility of Trump’s presidency, reduced sales in Poland affecting the demand for air to water products, and quality issues in the energy sector.

InvestingPro Insights

In light of the recent earnings call, it’s important to consider the financial health and market position of Panasonic Corporation (PCRFY), as reflected by the latest metrics from InvestingPro. PCRFY is currently trading at a low earnings multiple, with a P/E Ratio of 7.28 and an adjusted P/E Ratio for the last twelve months as of Q2 2024 at 7.32. This could indicate that the stock is potentially undervalued compared to earnings, which aligns with the company’s report of increased sales and profits. Furthermore, Panasonic has shown a commitment to returning value to shareholders, maintaining dividend payments for 32 consecutive years, an InvestingPro Tip that speaks to its financial stability and reliability as an investment. This is a key consideration for investors looking for consistent income streams. From a growth perspective, the company’s revenue growth for the last twelve months as of Q2 2024 stands at 6.51%, despite a slight quarterly dip of -0.02%. This growth is supported by a robust gross profit margin of 28.08%, showcasing the company’s ability to maintain profitability amidst various market challenges. For investors seeking more in-depth analysis and additional InvestingPro Tips, a subscription to InvestingPro is now on a special New Year sale with a discount of up to 50%. Use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription. With the subscription, investors can access a total of 5 InvestingPro Tips for Panasonic Corporation, providing a comprehensive understanding of the company’s market position and potential investment opportunities.

Full Transcript – Panasonic Corp PK (PCRFY) Q3 2024:

Panasonic Representative: I would like to go over the Consolidated Financial Results for the Third Quarter of Fiscal 2024. These are the highlights. Regarding the U.S. Inflation Reduction Act or IRA, the accounting treatment is the same as in the first and second quarters. Proposed rules for section 45X was released last December, but there are no major changes to the contents. Next, the results for the third quarter. Those sales and profit increased, even excluding the IRA impact. Overall sales increased due to increased sales in Automotive and currency translation, despite lower sales in Lifestyle and Industry. Adjusted operating profit increased overall on higher profit and Lifestyle, Automotive and Energy, despite lower profit in Connect and Industry. Net profit increased mainly on above factors, as well as improved finance, income and expenses. Operating cash flows for nine months significantly increased year-on-year, due mainly to reduced inventories. For the full year forecast, the Group-wide forecast remains unchanged. The partnership with Apollo regarding Panasonic Automotive Systems business announced in November is not factored into our forecast. By segment, the forecasts are revised, reflecting changes in each business environment. In Automotive, both sales and profit are revised upward, while in Lifestyle, both sales and profit are revised downward. In Connect and Energy, sales are revised upward. First, the impact of the U.S. IRA tax credit on our financial results and forecast. The accounting treatment and items remain unchanged since the first quarter. The amount recorded for the third quarter and full year forecast are shown on this slide. The full year forecast remains unchanged. Now, the details of the consolidated financial results for the third quarter. For the consolidated financial results, both sales and profit increased. Overall sales increased to JPY2,180.9 billion or 1% year-on-year. Sales in real terms on constant currency decreased slightly by 2%. Adjusted OP increased by JPY40.2 billion to JPY126.1 billion and operating profit increased by JPY43.1 billion to JPY127.5 billion. Profit before income taxes and net profit both increased due mainly to the above factors and an improvement in finance income and expenses on higher interest rates. Even excluding the IRA impact, profit increased as shown on the right. Results by segment are as shown here. Variance analysis for sales and OP are shown in later slides. First, sales analysis by segment. Lifestyle sales decreased overall due to lower sales in HVAC and weakening demand in Europe, lower sales in consumer electronics, mainly in Asia and China, and the partial deconsolidation of the China business, despite…

Read More of this Story at – 2024-02-02 20:55:00

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